FRANKLIN VALUEMARK FUNDS
000 Xxxxxxxx Xxxxxx Xxxx.
Xxx Xxxxx, Xxxxxxxxxx 00000
Franklin/Xxxxxxxxx Distributors, Inc.
000 Xxxxxxxx Xxxxxx Xxxx.
Xxx Xxxxx, Xxxxxxxxxx 00000
Re: Distribution Agreement
Gentlemen:
We, FRANKLIN VALUEMARK FUNDS (the "Trust") , comprised of the series listed
on Attachment A (each a "Portfolio", and collectively, the "Portfolios") are
a Massachusetts business trust operating as an open-end management investment
company or "mutual fund", which is registered under the Investment Company
Act of 1940 (the "1940 Act"), and whose shares are registered under the
Securities Act of 1933 (the "1933 Act"). We desire to issue one or more
series or classes of our authorized but unissued shares of beneficial
interest (the "Shares") to authorized persons in accordance with applicable
Federal and State securities laws and in accordance with the terms of our
Prospectus as it may be amended from time to time ("Prospectus"). Currently,
Trust shares may be offered and sold at net asset value only to separate
accounts of insurance companies ("Insurance Companies") to fund the benefit
of variable life insurance policies and variable annuity contracts
("Contracts"). The Trusts' Shares may be made available in one or more
separate series, each of which may have one or more classes.
You have informed us that your company is registered as a broker-dealer under
the provisions of the Securities Exchange Act of 1934 and that your company
is a member of the National Association of Securities Dealers, Inc. You have
indicated your desire to act as the exclusive selling agent and distributor
for the Shares. We have been authorized to execute and deliver this
Distribution Agreement ("Agreement") to you by a resolution of our Board of
Trustees ("Board") passed at a meeting at which a majority of Board members,
including a majority who are not otherwise interested persons of the Trust
and who are not interested persons of our investment adviser, its related
organizations or with you or your related organizations, were present and
voted in favor of the said resolution approving this Agreement.
1. APPOINTMENT OF UNDERWRITER. Upon the execution of this Agreement
and in consideration of the agreements on your part herein expressed and upon
the terms and conditions set forth herein, we hereby appoint you as the
exclusive sales agent for our Shares and agree that we will deliver such
Shares as you may sell. You agree to use your best efforts to promote the
sale of Shares, but are not obligated to sell any specific number of Shares.
However, the Trust and each series retain the right to make direct
sales of its Shares without sales charges consistent with the terms of the
then current prospectus statement of additional information (hereinafter,
collectively, "Prospectus") and applicable law, and to engage in other
legally authorized transactions in its Shares which do not involve the sale
of Shares to the general public. Such other transactions may include,
without limitation, transactions between the Trust or any series or class and
its shareholders only, transactions involving the reorganization of the Trust
or any series, and transactions involving the merger or combination of the
Trust or any series with another corporation or trust.
2. INDEPENDENT CONTRACTOR. You will undertake and discharge your
obligations hereunder as an independent contractor and shall have no
authority or power to obligate or bind us by your actions, conduct or
contracts except that you are authorized to promote the sale of Shares. You
may appoint sub-agents or distribute through dealers or otherwise as you may
determine from time to time, but this Agreement shall not be construed as
authorizing any dealer or other person to accept orders for sale or
repurchase on our behalf or otherwise act as our agent for any purpose.
3. OFFERING PRICE. Shares shall be offered for sale at a price
equivalent to the net asset value per share of that series and class plus any
applicable percentage of the public offering price as sales commission, if
any, or as otherwise may be set forth in our then current Prospectus. On each
business day on which the New York Stock Exchange is open for business, we
will furnish you with the net asset value of the Shares of each available
series and class which shall be determined in accordance with our then
effective Prospectus. All Shares will be sold in the manner set forth in our
then effective Prospectus, and in compliance with applicable law.
4. COMPENSATION.
A. SALES COMMISSION. You shall be entitled to charge a sales
commission on the sale or redemption, as appropriate, of each series and
class of the Trust's shares in the amount of any initial, deferred or
contingent deferred sales charge, if any, as may be set forth in our then
effective Prospectus. You may allow any sub-agents or dealers such
commissions or discounts from and not exceeding the total sales commission as
you shall deem advisable, if and so long as any such commissions or discounts
are set forth in our current Prospectus to the extent required by the
applicable Federal and State securities laws. You may also make payments to
sub-agents or dealers from your own resources, subject to the following
conditions: (a) any such payments shall not create any obligation for or
recourse against a Trust or any series or class, and (b) the terms and
conditions of any such payments are consistent with our Prospectus and
applicable federal and state securities laws and are disclosed in our
Prospectus to the extent such laws may require.
B. DISTRIBUTION PLANS. You shall also be entitled to compensation
for your services as provided in any Distribution Plan adopted as to any
series and class of any Trust's Shares pursuant to Rule 12b-1 under the 1940
Act.
5. TERMS AND CONDITIONS OF SALES. Shares shall be offered for sale
only in those jurisdictions where they have been properly registered or are
exempt from registration, and only to those groups of persons which the Board
may from time to time determine to be eligible to purchase such Shares.
6. ORDERS AND PAYMENT OF SHARES. Orders for Shares shall be
directed to the Trust's shareholder services agent, for acceptance on behalf
of the Trust. At or prior to the time of delivery of any of our Shares you
will pay or cause to be paid to the custodian of the Trust's assets, for our
account, an amount in cash equal to the net asset value of such Shares.
Sales of Shares shall be deemed to be made when and where accepted by the
Trust's shareholder services agent. The Trust's custodian and shareholder
services agent shall be identified in the Prospectus.
7. PURCHASES FOR YOUR OWN ACCOUNT. You shall not purchase our
Shares for your own account for purposes of resale to the public or any other
purpose, except that if our Prospectus is later amended to permit the sale of
our Shares to persons other than Insurance Companies, you may purchase Shares
for your own investment account upon your written assurance that the purchase
is for investment purposes and that the Shares will not be resold except
through redemption by us.
8. ALLOCATION OF EXPENSES. We will pay the expenses:
(a) Of the preparation of the audited and certified financial
statements of our company to be included in any
Post-Effective Amendments ("Amendments") to our
Registration Statement under the 1933 Act or 1940 Act,
including the Prospectus or in reports to existing
shareholders included therein;
(b) Of the preparation, including legal fees, and printing of
all Amendments or supplements filed with the Securities and
Exchange Commission, including the copies of the
Prospectuses included in the Amendments and the first 10
copies of the definitive Prospectuses or supplements
thereto, other than those necessitated by your (including
your "Parent's") activities or Rules and Regulations
related to your activities where such Amendments or
supplements result in expenses which we would not otherwise
have incurred;
(c) Of the preparation, printing and distribution of any
reports or communications which we send to our existing
shareholders; and
(d) Of filing and other fees to Federal and State securities,
insurance, or other regulatory authorities necessary to
continue offering our Shares.
You will pay the following expenses, except to the extent that the Insurance
Companies or others pay or agree to pay such expenses:
(a) Of printing the copies of the Prospectuses and any
supplements thereto which are necessary to continue to
offer our Shares;
(b) Of the preparation, excluding legal fees, and printing of
all Amendments and supplements to our Prospectuses if the
Amendment or supplement arises from your (including your
"Parent's") activities or Rules and Regulations related to
your activities and those expenses would not otherwise have
been incurred by us;
(c) Of printing additional copies, for use by you as sales
literature, of reports or other communications which we
have prepared for distribution to our existing
shareholders; and
(d) Incurred by you in advertising, promoting and selling our
Shares.
9. FURNISHING OF INFORMATION. We will furnish to you such
information with respect to each series and class of Shares, in such form and
signed by such of our officers as you may reasonably request, and we warrant
that the statements therein contained, when so signed, will be true and
correct. We will also furnish you with such information and will take such
action as you may reasonably request in order to qualify our Shares for sale
to the public under the Securities, insurance or other applicable laws of
jurisdictions in which you may wish to offer them. We will furnish you with
annual audited financial statements of our books and accounts certified by
independent public accountants, with semi-annual financial statements
prepared by us with registration statements, and, from time to time, with
such additional information regarding our financial condition as you may
reasonably request.
10. CONDUCT OF BUSINESS. Other than our currently effective
Prospectus, you will not issue any sales material or statements except
literature or advertising which conforms to the requirements of Federal and
State securities laws and regulations and which have been filed, where
necessary, with the appropriate regulatory authorities. You will furnish us
with copies of all such materials prior to their use and no such material
shall be published if we shall reasonably and promptly object.
You shall comply with the applicable Federal, State foreign or
other applicable laws and regulations where our Shares are offered for sale
and conduct your affairs with us and with dealers, brokers or investors in
accordance with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc.
11. REDEMPTION OR REPURCHASE WITHIN SEVEN DAYS. If Shares are
tendered to us for redemption or repurchase by us within seven business days
after your acceptance of the original purchase order for such Shares, you
will immediately refund to us the full sales commission (net of allowances to
dealers or brokers, if any) allowed to you on the original sale, and will
promptly, upon receipt thereof, pay to us any refunds from dealers or brokers
of the balance of sales commissions reallowed by you. We shall notify you of
such tender for redemption within 10 days of the day on which notice of such
tender for redemption is received by us.
12. OTHER ACTIVITIES. Your services pursuant to this Agreement shall
not be deemed to be exclusive, and you may render similar services and act as
an underwriter, distributor or dealer for other investment companies in the
offering of their shares.
13. TERM OF AGREEMENT. This Agreement shall become effective on the
date of its execution, and shall remain in effect for a period of two (2)
years. The Agreement is renewable annually thereafter, with respect to the
Trust or, if the Trust has more than one series, with respect to each series,
for successive periods not to exceed one year (i) by a vote of (a) a majority
of the outstanding voting securities of the Trust or, if the Trust has more
than one series, of each series, or (b) by a vote of the Board, and (ii) by a
vote of a majority of the members of the Board who are not parties to the
Agreement or interested persons of any parties to the Agreement (other than
as members of the Board), cast in person at a meeting called for the purpose
of voting on the Agreement.
This Agreement may at any time be terminated by the Trust or by
any series without the payment of any penalty, (i) either by vote of the
Board or by vote of a majority of the outstanding voting securities of the
Trust or any series on 90 days' written notice to you; or (ii) by you on 90
days' written notice to the Trust; and shall immediately terminate with
respect to Trust and each series in the event of its assignment.
14. SUSPENSION OF SALES. We reserve the right at all times to
suspend or limit the offering of Shares upon two days' written notice to you.
15. MISCELLANEOUS. This Agreement shall be subject to the laws of
the State of California and shall be interpreted and construed to further
promote the operation of the Trust as an open-end investment company but
shall not supersede or revise any Distribution Plan between the parties
adopted pursuant to Rule 12b-1 under the 1940 Act. As used herein, the terms
"Net Asset Value," "Offering Price," "Investment Company," "Open-End
Investment Company," "Assignment," "Principal Underwriter," "Interested
Person," "Parent," "Affiliated Person," and "Majority of the Outstanding
Voting Securities" shall have the meanings set forth in the 1933 Act or the
1940 Act and the Rules and Regulations thereunder.
Nothing herein shall be deemed to protect you against any liability to us or
to our securities holders to which you would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of
your duties hereunder, or by reason of your reckless disregard of your
obligations and duties hereunder.
If the foregoing meets with your approval, please acknowledge your acceptance
by signing the enclosed copy, whereupon this will become a binding agreement
as of the date set forth below.
Very truly yours,
FRANKLIN VALUEMARK FUNDS
By: /S/XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Vice President & Secretary
Accepted:
FRANKLIN/XXXXXXXXX DISTRIBUTORS, INC.
By: /S/XXXXXX X. XXXXX
Xxxxxx X. Xxxxx
Executive Vice President
DATED: SEPTEMBER 24, 1998
ATTACHMENT A
Money Market Fund
Growth and Income Fund
Natural Resources Securities Fund
Real Estate Securities Fund
Global Utilities Securities Fund
High Income Fund
Xxxxxxxxx Global Income Securities Fund
Income Securities Fund
U.S. Government Securities Fund
Zero Coupon Fund - 2000
Zero Coupon Fund - 2005
Zero Coupon Fund - 2010
Rising Dividends Fund
Templeton Pacific Growth Fund
Xxxxxxxxx International Equity Fund
Templeton Developing Markets Equity Fund
Templeton Global Growth Fund
Templeton Global Asset Allocation Fund
Small Cap Fund
Capital Growth Fund
Xxxxxxxxx International Smaller Companies Fund
Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Global Health Care Securities Fund
Value Securities Fund
